When Congress passed the Employee Retirement Security Act of 1974, better known as ERISA, lawmakers intended to set certain minimum standards for private employer-provided health and retirement benefits programs. Today, half a century later, ERISA covers more than 60% of workers who have private health care coverage.
In keeping with that goal, the text of the law makes clear that the federal ERISA preempts any conflicting state laws covering the same subject matter. In other words, if courts find ERISA conflicts with a state law, ERISA takes priority.
When ERISA doesn’t preempt state law
Generally, ERISA preempts state law in all cases involving health care and retirement plans that are subject to ERISA. However, there are some related cases in which state law takes priority. These include:
- Plans administered by government agencies or government contractors
- Plans administered by religious organizations
- Workers’ compensation benefits
- Health, retirement, disability or unemployment benefits that are not part of an employer-provided plan
Why this matters to workers
In one sense, the concept of ERISA preemption is good for workers because it makes it can prevent one state from providing less protection than others. However, it can also create difficulties in many cases.
For the most part, the insurance industry is regulated under state law, and therefore states tend to provide the strongest consumer protections related to insurance. For example, some state laws provide consumers with the right to a jury trial in bad faith insurance cases, but ERISA does not. ERISA provides only for a bench trial, meaning that a judge decides the case without input from a jury. Similarly, some states provide for punitive damages and/or awards for attorney fees in some cases, but ERISA does not.
This means, in any dispute involving an employer-provided health or retirement plan, one of the most important steps for workers is to determine whether ERISA applies to their plan and their case. This can be a highly complex subject, and workers can benefit from discussing their cases with experienced professionals.
